The Cool Kids Don't Like Bonds Anymore

By The Inflation Trader: Global stock markets were the boring markets for a change, as today global bond markets took a potentially meaningful step back. In the U.S., 10-year yields rose 15bps (with no economic data to point to), reaching 2.28%. Yesterday I noted that most of the last week’s rise in yields had come from an increase in inflation expectations; that trend corrected today, as TIPS were also hammered. Ten-year TIPS yields rose 12bps, to -0.10%, implying that the 10-year breakeven rose a mere 3bps. This was not just a U.S. story. The 10-year UK Gilt rose to the highest yield since December, +17bps today. Germany was +13bps today although still in the range; JGBs up to the highest level since December although that’s also only 9bps above the low yield from the last quarter since JGB yields have been effectively ‘pinned’ for a long time. Although in the U.S. our selloff wasComplete Story »

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Marc Chandler submits:The US dollar is mixed at the start of the new week. The absence of London markets is serving to dampen turnover. The reluctance of the Bank of Japan to get ahead of market expectations saw the yen recover smartly after the greenback neared JPY86. Initial support for the dollar near JPY84.50 is likely to be tested shortly. For its part, the euro has been confined to its pre-weekend range. Three times in as many sessions, the euro was turned back from approaching $1.2780.

Today's market action is largely a continuation of the QE relief rally, where - at least for the time being - the market bought the rumor for over 2 years and is desperate to show it can aslo buy the news. As a result, the European multiple-expansion based stock ramp has resumed with the Eurostoxx advancing for a 7th day to extend their highest level since Dec. 2007.

By Alpha Now at Thomson Reuters:
By Konstantinos Venetis
Over and above domestic considerations, policymakers are likely to keep some ammunition in reserve given the potential for JGB yields to gravitate higher as Fed rate normalisation gets underway going into next year.
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The latest "most important payrolls day of all time" day is finally upon us. Of course, this is a ridiculous statement: considering that the average December seasonal adjustment to the actual, unadjusted number is 824K jobs, it will once again be up to the BLS' Arima X 13 goal-seeking, seasonal adjusting software to determine whether the momentum ignition algos send stocks soaring or plunging, especially since the difference between up and down could be as small as 30K jobs.

In the six weeks since the last FOMC meeting there has been almost uninterrupted relatively 'hawkish' chatter from Fed members. However, the consensus remains convinced there will be no 'Taper' anytime soon - as somewhat evidenced by the following summary of FOMC expectations from Goldman's Jan Hatzius.

Canada’s dollar declined to a two- week low versus its U.S. counterpart as concern increased that the world’s 11th-largest economy is slowing.
The currency weakened versus the majority of its most-traded peers after data on Feb. 8 showed employment unexpectedly fell, the nation had its ninth straight monthly trade deficit and housing starts sank to the lowest since 2009. The loonie also fell as commodities and global stocks sank amid ebbing risk appetite.